Arizona Governor Guilty of Fraud, Forced to Resign

A federal jury in Phoenix on Wednesday convicted Arizona Gov. Fife Symington of lying to lenders to get millions of dollars for his failing real estate ventures, making him the state’s second governor to be ousted in less than a decade.

The great-grandson of steel baron Henry Clay Frick stared downward as the five-woman, seven-man jury--which had deliberated 54 hours--returned the verdict that stripped him of the office he had held since 1991 and may send him to prison for years.

The 52-year-old Republican, now bankrupt, is scheduled for sentencing on Nov. 10.

At a news conference, Symington tearfully said he plans to relinquish his office on Friday to Arizona’s Republican secretary of state, Jane Hull--an experienced, assertive and highly regarded former state legislator who many believe will be anything but a caretaker governor.

“Every once in awhile there is salvation in surrender,” he said. “I am returning to private life with my head up, spirits high and my heart full of gratitude.”

Symington was indicted last summer after a five-year probe by the U.S. attorney’s office in Los Angeles. He was charged with 19 counts of inflating his assets on financial documents when he wanted money, and understating his wealth when he wanted to get out of loan guarantees; and one count each of attempted extortion and perjury.

The jury found him guilty of seven counts of filing false financial statements to banks. He was acquitted of three counts, including the inflammatory charge of trying to use his power of office to extort concessions from a pension fund he owed $10 million. U.S. District Judge Roger Strand declared a mistrial on the rest of the counts--on all of which the jury had deadlocked.

“Today,” said Melodee Jackson, executive director of the Arizona Democratic Party, “a jury of peers, in a very complicated case, decided that everyone must play by the same rules and no one is above the law.”

John Dowd, Symington’s lead attorney and a specialist in white-collar crime, promised to appeal the convictions, in part because of the dismissal and replacement of a juror seven days after the start of deliberations.

Dowd has argued that 74-year-old Mary Jane Cotey, who reportedly wanted to acquit Symington on all charges, was improperly dismissed from the panel after other jurors accused her of being incapable of or unwilling to participate in deliberations.

“We tried a hell of a case; I’m sorry Fife has to take the consequences,” he said. “But we’ll win this case eventually. We’ve got to take it one inning at a time.”

During the 16-week trial, prosecutors portrayed Symington as a real estate con artist who swindled lenders into giving him $200 million in loans between 1986 and 1991--and who did not make good on financial guarantees when his construction projects failed.

After reviewing 1,400 documents and three months worth of tedious, technical and often conflicting testimony from nearly 40 witnesses, the jury agreed.

In his final argument, Assistant U.S. Atty. David Schindler said that Symington deceived lenders to keep his real estate empire of gleaming office buildings and shopping centers afloat by creating the impression he was successful, credit-worthy and worth millions of dollars.

“He liked the prestige that came with the illusion that he was a big real estate developer,” Schindler told the jury. “And, ladies and gentlemen, he parlayed that illusion . . . into the job he holds today.”

Ultimately, Symington watched all but one of his two dozen projects collapse like dominoes when the real estate market went into a free-fall here in the early 1990s.

Symington--both in testimony and through his attorney--asserted during the trial that he never profited from the “unintentional” errors and omissions in his financial statements, that his accountants should have caught the blunders and that no one ever complained.

Moreover, Symington said, his lenders did not rely on the questionable information to make a decision when they gave him hefty development loans. Instead, he said, he received the loans on the basis of his reputation and track record as a developer.

In effect, he seemed to argue, he was too busy reshaping Arizona society and creating jobs to pay attention to details in his financial statements.

“In hindsight, it’s easy to say that Mr. Symington should have done a better job with his financial statements,” Dowd told the jury. But “he guaranteed and delivered what they [lenders] paid for with their money.”

Not so, argued Schindler, who used Symington’s own testimony and financial records to establish a pattern of deceit.

Between 1986 and 1991, Schindler said, Symington prepared numerous sets of false personal statements--bearing the same “as of” dates but reporting different net worths--for various lenders, including First Interstate Bank and Valley National Bank.

For example, Symington fabricated three versions of his financial condition as of Dec. 31, 1989. One, submitted to a bank from which he needed money, showed a net worth of $5.3 million. Another, supplied to a bank from which he sought loan concessions, showed he was $4.1 million in debt. A third submission said that he had not prepared a statement for that period.

Now Symington, a Harvard-educated, son of a wealthy East Coast family whom critics refer to as “the only man in Arizona who doesn’t own a T-shirt,” joins the state’s growing list of notorious politicos and shady business owners who made their mark during the 1980s--and then ran afoul of the law.

In 1988, then-Gov. Evan Mecham was impeached for diverting inaugural ball donations into a loan for his ailing Pontiac dealership. Symington was among the first prominent businessmen to publicly support Mecham’s recall.

In 1990, eight state legislators were captured on videotape accepting wads of cash from an undercover agent in a sting operation known as AzScam. Then came the “Keating Five,” a group of federal lawmakers with personal ties to savings-and-loan swindler Charles H. Keating Jr.

Back then, the antidote to the parade of scandals seemed to be Symington, who promised to attract industry, boost tourism, restore political stability and clean up the state’s image. Arizona Trend magazine even called him a man with the “credentials of an East Coast dandy, but a Westerner’s love for land deals and brawls.”

“It’s been like an epidemic that has tragically obliterated our former favorable record,” said former Phoenix Mayor Terry Goddard. “Once, we were known as a small state that produced great national leaders and presidential candidates--people like Barry Goldwater and the Udalls.”

Supporters praised Symington’s record of cutting state income taxes by 30%, overhauling the state justice system, fighting federal intrusion into state affairs and cutting regulations to make Arizona more friendly to business.

But even those who lionize the conservative leader have grown weary of his intense personal struggles and the turmoil wreaked on the state.

“Regardless of what happens to Fife Symington,” said Jess Yescalis, a spokesman for the Arizona Republican Party, in an earlier interview, “there is a definite yearning for political stability in Arizona. People here are tired of having our governor being in court and taking fire.”

Special correspondent Camille Kimball in Phoenix contributed to this story.